Revenue wrote off 20% of unpaid tax last year on grounds of inability to pay

The Revenue Commissioners wrote off 20 per cent of unpaid tax from tax defaulters last year on the basis that they could not afford to pay the full amount.

New figures show that of the €70 million owed by tax defaulters up to September of last year, some €43 million was either paid or subject to “phased payment” agreements.

However, the Revenue wrote off €14.5 million on the ground of inability to pay, while a further €12 million was referred for “collection enforcement proceedings” so there is no guarantee it will all be collected.

The total amount of unpaid tax for 2012 is likely to be significantly higher as it does not include settlements for the final quarter of the year.

These are expected to be published shortly.

The amount of unpaid tax written off last year is a significant increase on 2011, when the equivalent for three-quarters of the year was some €6.5 million.

Until recently tax defaulters were able to avoid having their details published if they refused to either agree liability or pay settlements.

This loophole was closed off through legislation enacted two years ago.

Since 2011, the liability of any significant tax defaulter who either fails to agree a settlement or to pay all or part of a settlement is automatically published.

The published figures show a defaulter’s total liability, and do not typically show how much tax has been written off.

‘Rigorous procedures’

The Department of Finance has pointed out that before the Revenue accepts a person is unable to pay their full liability, they are subject to “rigorous procedures”, including a detailed examination of their finances.

To put the figures in a wider context, the Revenue has stated that the total yield from its audit programme in the year up to September 2012 was €275 million.

Of this just over €32 million was referred for collection enforcement and €15 million was uncollected on the grounds of the taxpayers’ inability to pay.

One of the most high-profile cases last year related to the construction company owned by Independent TD Mick Wallace, which made a settlement with the Revenue of €2.1 million for undeclared tax.

MJ Wallace Ltd, with an address at Ormond Quay, Dublin, made the settlement arising from a Revenue audit.

The company under-declared €1.4 million of VAT, and Revenue imposed interest and penalty charges of more than €700,000.

Agreed settlement

The company was not in a position to pay the debt and Mr Wallace told the Dáil last year that he would use half of his TD’s salary – it is around €93,000, plus about €20,000 in allowances – as part of an agreed settlement with the Revenue to pay off the liability.

However, there is little chance of the TD being able to repay all the outstanding tax. Mr Wallace would need to serve as a backbencher for about 87 years to earn enough money so he can pay the money in full.

The changes regarding publication of tax defaulters were introduced to help ensure the public is aware of the identity of anyone with tax liabilities, whether or not they made the relevant payments to the Revenue.

In 2010, for example, there were 305 settlements with Revenue, which totalled almost €68 million.

The following year the number of settlements reached 366. Settlements, along with tax and penalties, totalled more than €75 million.

Up to the end of September 2012, there were a total of 348 settlements.

The overall total was just over €70 million, according to a parliamentary question.